Dominion Diamond Mines has filed for insolvency protection under the Companies’ Creditors Arrangement Act (CCAA) and obtained an order from the Alberta Court of Queen’s Bench granting Dominion protection.
The company said the filing was brought about primarily by the impact of the coronavirus (COVID-19) pandemic. Although Dominion has a strong diamond inventory, sorting houses and diamond markets are closed, so there is no ability to generate sufficient revenue to support the company’s ongoing financial obligations, the company added.
Given the rapidly evolving environment and uncertainty of the scope and duration of the restrictions and health and safety concerns associated with the COVID-19 pandemic, along with market dislocation and the continued capital calls from the Diavik joint venture, Dominion said it believes this is the most prudent course of action.
Dominion said it is considering a proposal from an affiliate of The Washington Cos., Dominion’s current equity owner, to provide debtor-in-possession (DIP) financing, which would help provide sufficient liquidity through the CCAA process. The company said it is reviewing the proposal.
Whether or not Dominion agrees to the Washington proposal, it expects as part of the restructuring to obtain new financing, which combined with the company’s available cash, should provide sufficient liquidity to continue to operate during the CCAA process for the benefit of local communities and other stakeholders.
As the spread of COVID-19 subsides and diamond markets reopen, Dominion said it plans to resume mining operations at the Ekati diamond mine and safely recall its furloughed workers.
During the CCAA process, it is expected that Dominion’s management will continue to be responsible for handling the care and maintenance at Ekati and all other necessary day-to-day operations.
Dominion owns a controlling interest in the Ekati diamond mine, which it operates, and 40% of the Diavik diamond mine. The company also holds a controlling interest in the Lac De Gras diamond project. All three are located in the Northwest Territories of Canada.
